[Analyst]

Why doesn't China have respectable brands that can compete in developed markets such as the US and Europe?

I think biggest obstacle to achieve that is the requirement that foreign automakers have a Chinese partner (the joint-ventures). Yes, I am saying this with a lot of hindsight, but while the idea of "Hey, let's force them to have a JV so we don't have to start from scratch" might have looked good in the beginning, it is clearly not going anywhere.

This is only slowing down the development of China's indigenous auto industry, because foreign automakers in forced JV's will not give up their latest technology. Instead, the Chinese market is fed with outdated platforms and tech. Automakers that have JV's have no real push to develop anything, because they already have a "partner."

The ones that don't will make cheaper cars for the other segment of the market, in a "race to the bottom." If China wants to have a respectable world-class automotive industry, they need to abolish the forced JV's as soon as possible. Indigenous automakers should still be protected, but when they are making cars to compete with rivals rather than "partners," there will be a push for development.

Would you agree?

 

[micodelija]

chinese car industy is the biggest in the world..so we should first check problem in europe and US...and then bother with china, to be china don't have any problems in their car industy with such good sale

 

[Analyst]

chinese car industy is the biggest in the world..so we should first check problem in europe and US...and then bother with china, to be china don't have any problems in their car industy with such good sale

China is the biggest auto market in the world. What I meant was for China to have respectable brands that can compete in developed markets such as the US and Europe.

And that's another problem. Because the market is so huge and the Chinese consumer is not very demanding, there is no urgency to develop the industry, unlike in Japan and Korea - where automakers realized they needed to export cars. And in order to do that, they needed quality products.

 

[green car driver]

Would you agree?

No.

It just takes time. You can't start car manufacturing from scratch and be at the same level of those who have been doing it for several decades in only a few years. Think about how to make a good steering. That, in my mind, is the most important thing in a car. You can outsource it, but it takes years of experiences to be able to design a steering system that gives a good feeling.

We often hear that the chinese will do what the japanese did in 40 years, I say that this is not possible. It just takes time to learn.

 

[Analyst]

It's just my opinion that this model is nice on paper to "jump start" the industry, but not good for long term development. Just look at brands who have JV's set up, their own independent brands are atrocious. For example, FAW's Xiali, their cars look outdated by at least 20 years.

The Japanese had to play catch up, so did the Koreans. The Chinese might eventually get there, but with JV's it will take much longer.

 

[TonyJZX]

what's likely to happen is that until local demand is satisfied, China will not care too much about overseas sales...

 

[jmsteiny]

I have a question for you, Analyst - what "problem" are you referring to? You seem to think that it's a "problem" that China hasn't started selling cars in America/Europe - why? One HUGE thing to keep in mind - China's auto industry (at least for the average consumer here) is barely 15 years old. Geely produced it's first car in 1998, Chery in 2001. BYD was/is a battery company, they just started making cars 7-8 years ago.........get the picture now? Plus, look at the economic situation right now......do you REALLY think China is going to try and enter the American/European market at this time?

My point? GIVE THE CHINESE AUTO INDUSTRY SOME TIME. I don't know if you live here, but I do - and I've been fortunate enough to see the rate of improvement in the industry over the last 7 years..........simply amazing. I can remember seeing BYD's first car - the Flyer. One of the ugliest things I ever saw, and 7 years later I'm now looking at their E6. What a difference 7 years make! The same with Geely - from the Haoqing then to Emgrand/Gleagle/Englon now - not to mention the new owners of Volvo. 7 years ago Roewe didn't exist...........and now they have incredible cars like the new 350.

China's auto industry wants to (and will) enter the American/European markets soon - just have a little patience. Personally, I think it's better for them to wait a little bit right now......let the economic situation stabilize a bit more in the world first, and also let the companies continue to develop products that are TRULY ready for the American and European markets. I don't see this as a "problem" at all, I simply see it as the chinese auto industry taking the long term approach and not rushing things at this time. Besides, it's already beginning to happen - Roewe is already developing a right side steering model of the 350 for the british market (which can also be sold in Hong Kong as well), BYD is planning on debuting the E6 in America this year or next year at the latest, and there is a decent chance that Chevy will IMPORT the next generation Spark from China to be sold in America. 5 years from now, I could easily see Geely selling Emgrand products in Volvo showrooms, BYD selling a range of electric/hybrid products, and possibly Roewe and Brilliance products as well - all on American or European streets. Is THAT soon enough for you?:thumb: :lol:

 

[Analyst]

I have a question for you, Analyst - what "problem" are you referring to? You seem to think that it's a "problem" that China hasn't started selling cars in America/Europe - why? One HUGE thing to keep in mind - China's auto industry (at least for the average consumer here) is barely 15 years old. Geely produced it's first car in 1998, Chery in 2001. BYD was/is a battery company, they just started making cars 7-8 years ago.........get the picture now? Plus, look at the economic situation right now......do you REALLY think China is going to try and enter the American/European market at this time?

My point? GIVE THE CHINESE AUTO INDUSTRY SOME TIME. I don't know if you live here, but I do - and I've been fortunate enough to see the rate of improvement in the industry over the last 7 years..........simply amazing. I can remember seeing BYD's first car - the Flyer. One of the ugliest things I ever saw, and 7 years later I'm now looking at their E6. What a difference 7 years make! The same with Geely - from the Haoqing then to Emgrand/Gleagle/Englon now - not to mention the new owners of Volvo. 7 years ago Roewe didn't exist...........and now they have incredible cars like the new 350.

China's auto industry wants to (and will) enter the American/European markets soon - just have a little patience. Personally, I think it's better for them to wait a little bit right now......let the economic situation stabilize a bit more in the world first, and also let the companies continue to develop products that are TRULY ready for the American and European markets. I don't see this as a "problem" at all, I simply see it as the chinese auto industry taking the long term approach and not rushing things at this time. Besides, it's already beginning to happen - Roewe is already developing a right side steering model of the 350 for the british market (which can also be sold in Hong Kong as well), BYD is planning on debuting the E6 in America this year or next year at the latest, and there is a decent chance that Chevy will IMPORT the next generation Spark from China to be sold in America. 5 years from now, I could easily see Geely selling Emgrand products in Volvo showrooms, BYD selling a range of electric/hybrid products, and possibly Roewe and Brilliance products as well - all on American or European streets. Is THAT soon enough for you?:thumb: :lol:

Very insightful post, thank you.

The "problem" I am referring to isn't not being in the European/American market per se, but the inability of competing in these mature markets due to lower quality cars, which is the real problem. I don't want them to come just yet, because look at Hyundai, it took them decades to (partially) overcome their bad reputation. It will be even worse for a Chinese company, which will be seen with a lot more distrust than Hyundai and Kia.

That being said, I am following from afar the evolution of the Chinese industry, especially the independent automakers (Geely, Chery, etc). My real beef is with the state-owned giants (FAW, SAIC, etc.) which simply crank out foreign cars and don't seem to care much about self-developed brands (MG-Roewe being an exception). I appreciate Geely and Chery's efforts to move away from the lowest segment of the market; but unfortunately Chinese people seem to have inexplicable fanaticism over foreign (especially American) brands and regard domestic automakers as laji.

GM cars are utter rubbish, VW isn't that great either; yet people will buy their junk and think they are good cars. Seeing things like GM growing spetacularly or VW selling this garbage in China just makes me mad and sad.

In summary, my "thesis" is, yes, the industry is evolving. But with JV's the development is a lot slower - companies in JV's don't develop their own brands AND cars made by these JV's ride on older platforms. On the other hand, companies NOT in JV's compete in the low cost segment. What China should do is abolish the JV's and slap huge taxes on imports, like Japan and Korea did. It will get Chinese automakers "there" faster.

 

[jmsteiny]

Analyst, I see where you are coming from......and I agree with some things. That being said, I DO take exception with your evaluation of the VW Jetta as being "garbage" - that is absolutely the farthest thing from the truth. Is it old? Yes. Most western countries would laugh at it's ancient styling, and this is only made in China now. Why is it still here? VW has a range of MUCH more modern products, we both know that - the Jetta (and the Santana as well) SHOULD have been dead and buried long, long ago. HOWEVER........the good ol' Jetta (and Santana) are about the closest thing to a LEGEND that China has on the roads right now. Here in China, they are time honored, UTTERLY reliable and indestructible, parts are readily available for these cars throughout China (remember they are still HEAVILY used in taxi fleets) and because of that, repairs for these cars are CHEAP. Simply put, consumers TRUST these cars more than just about anything else on the roads - and ancient styling ends up being a secondary consideration because of this. VW has also kept up the safety features of these cars (regardless of the styling) with 4 wheel disc brakes, ABS, air bags, etc.....and while they might be ancient, they hold up VERY well over the course of time. One more thing - because they are so old in styling, VW prices them very competitive - you can buy a new Jetta here for about 70,000rmb (a little over $10,000 USD) and THAT is also very attractive for the consumer - real german technology and a car with a bulletproof reputation AND cheaper than many new CHINESE cars........no wonder it's still a top seller here.

Now for a dose of reality..........both of these cars (the Jetta and the Santana) will probably be gone in 2-3 years. The VW Lavida (a China only model) is pretty much set to take the place of the Santana - very similar size and not too far apart in pricing. The Lavida is MUCH more modern, and in a few years you'll probably be able to buy one for under 100,000rmb - about the same price as the Santana is right now. VW still will need a price point leader (below the Polo), so I could see them building the new generation Gol here - it's a very nice looking car and could be sold for possibly a lower price than the Jetta is right now. VW wanted to end production of these cars this year, but continued consumer demand compelled them to extend their lifespan a few more years!:nod:

Hopefully this will give you a little more perspective about these cars.........ancient as they are, they will ALWAYS hold a special place in the hearts of auto consumers here in China. I will not argue the fact that it's time for newer, more modern products to replace them.......but I will also mourn their passing when they are gone.

 

[Analyst]

Yes, I see the role the Jetta plays, which is akin to the Beetle in Brazil and Mexico, the Maruti 800 in India, the Lada in Russia... Cars that have stood the test of time and are ubiquitous, and are easy and cheap to fix with parts available everywhere in the country.

But the bottom line is, it's still a 20 year old car. Such things would never be acceptable in mature markets like the US and Europe.

 

[jmsteiny]

Yes, you get the idea............but do you think it is REALLY fair to compare a Lada or a Maruti to a Jetta? I've seen a Lada, and the Jetta is a virtual Mercedes compared to it in terms of quality, refinement and comfort. The Jetta is NOT basic transportation like the Lada or Maruti is.......if you want that in China we have the Chery QQ to fill that need. No, the Jetta is above that - it just occupies a special spot in the industry here. People who can afford to buy more expensive cars STILL buy Jettas and Santanas, and it's appeal is somewhat amazing I have to admit. I have a good friend who just bought a loaded version of the Nissan Teana (amazing car) for business, yet he STILL prefers to zip around in his Jetta during his free time. Like you, I would still prefer to have a newer, more modern product - but I really do understand WHY people still choose to buy a 20 year old design. It's called "peace of mind".

It's also worth noting that the prime sales market for the Jetta is not in the cities anymore, but in the more rural sections of China. People there are just now at the stage where they can afford to buy a car - and they don't scour the internet and read China Car Forums! People in the countryside could care less about the latest, most modern auto design out there, many of them probably have never heard of Maybach, or even Roewe - but they DO know the Jetta from seeing them for years and years on the street. Sure they know there are other choices out there (like a more modern chinese car that is cheaper) but they STILL choose the Jetta.............peace of mind.

 

[Rally Red Lancer GTS]

Analyst, that's what makes the Chinese market unique, then, and so interesting to study. jmsteiny's observations are truly appreciated here as he is a true "insider", one that lives in China. He helps all of us CCF readers stay connected, so to speak.

Thank you both for your valuable contributions to this thread.

 

[green car driver]

Why doesn't China have respectable brands that can compete in developed markets such as the US and Europe?

Excuse-me, but, who cares about that?

What is the goal of the chinese automotive industry?

1/ To build as many cars as possible at a moderate price so that most people can afford to buy one.
2/ To give jobs to hundreds of thousands of workers.

There is no chinese Ferrari, no chinese Rolls Royce, who needs one? Be it clothing, or watches, there's also few chinese luxury brands, what's wrong with that?

SAIC doesn't make any car that could compete with a Mercedes, but SAIC makes more cars than Mercedes, this is what matters in my mind: sales!

 

[Analyst]

It is exactly this "quantity over quality" mentality that won't take them anywhere. This is an extremely short-sighted point of view. A long time ago, Germany got over this, so did Japan, and now South Korea.

What's wrong with that? Chinese products will be recognized as "cheap junk" (as they already are) outside and inside of China as long as they keep cranking out low quality stuff. Manufacturing products with a lot of added value needs a lot of investment, but in the long run it's a lot more profitable.

Ask China's neighbors Japan and SK where that got them.

 

[jmsteiny]

OK, let's talk about "low quality stuff". Hey everyone - know that computer you're typing comments on? Regardless of what company it says on the outside, the inner parts - made in China. There's also a damn good chance that some of the clothes you're wearing right now.......are also made in China. If you drive a GM product, there's also a good chance that some of the replacement parts that you'll need for your car at some point in the future are.........let's all say it together now - MADE IN CHINA.

Yes, there is a difference in manufacturing a pair of socks compared to manufacturing a automobile - we're all smart enough to realize that. However, let's also keep something else in mind........manufacturing techniques today are a lot more standardized than they were 20-30 years ago. Today's modern assembly lines use robotics, computers and state of the art software to maintain consistent, high quality design tolerances - regardless of whether that assembly line is in America, Europe, Japan or China. IMO, the problem that still remains isn't the assembly or even the design, but the consistency of quality in the raw materials used to make the parts that need to be assembled.

Here's another question related to the term "low quality stuff" - how can we define that properly? Let's look at it another way - let's compare say.....a Ford and a Mercedes. Which one is the higher quality product? We all immediately said 'Mercedes', right - but WHY did we say that? I'm willing to bet that the assembly lines of Ford are just as modern and automated (if not more so) as Mercedes, and I'm ALSO willing to bet that the quality of the raw materials is of similar quality as well. I suppose at this point, it would be the proprietary designs that separate the two companies.....and it's those designs that infer the higher quality we associate with Mercedes vs. Ford. In today's modern world though, is the mechanical quality and reliability of a Mercedes REALLY better than a Ford? Would we even want to consider Ford "low quality stuff" nowadays? I don't think so. Now, if we look at chinese cars in a similar light........let's compare say, a Brilliance FRV to a Hyundai Excel of 20 years ago (I've driven the FRV and I owned a new 1988 Hyundai Excel, so I am qualified to give a accurate comparison). Engine size is about the same (1.6 for the FRV, 1.5 for the Excel) and about the same physical size (a 5 door hatch configuration)......anyone want to take a guess which is the superior car? Hands down, not even close - the FRV is MUCH more superior than the Excel was. Better power, better fuel economy, better steering and brakes, more comfortable - a MUCH BETTER car. I'd even compare the FRV favorably against say.........a 1993-1998 Honda Civic/Nissan Sentra - and that's not too shabby at all. Now, I can't say this about all chinese cars, and the truth is that some cars built here are still of very poor quality - THESE cars would define "low quality stuff". But.....these cars aren't ever meant to be exported, and even in the big chinese cities you won't see many of them - they're meant to be low priced offerings for smaller cities, towns and villages. The good news though........if you take the BEST that China has to offer (say the FRV or the Chery A3 - something modern, original and chinese in origin), it would be similar to how we compared Ford to Mercedes........I would compare Brilliance to Ford and honestly say that while Brilliance is a lower quality product than Ford, it is NOT a "low quality product".

Final question - if you could choose, today, in America, between a fully loaded FRV (auto trans, climate control, sunroof, power everything) - current price about $11,000 USD - or a stripped down Nissan Versa/Hyundai Accent (power nothing, no a/c and a 5 speed manual trans) - current price about $10,500 USD.............which would you choose? Let's hear about it everyone - there's no right or wrong answer, and this can be a nice "grass roots" poll - so don't be shy! :thumb:

 

[TonyJZX]

1st of all take out the big names

people buy Fords and BMWs and Mercedes for reasons other than sheer quality

right now no-one outside of china in a 1st world country wants to buy a Chinese car on their name

2ndly there's two things when i think about when it comes to quality... build quality and design/dynamic quality

I think a Chinese factory should have build quality down pat. There are Chinese BMW/Mercedes/Audi/VW factories right? Are they are the same quality level as German factories? I think they are. So this isn't an issue.

However let's not compare Chinese cars to Western cars just yet.

Drive any modern 2010 Hyundai or Kia.

Is the design and build up to the standard of Western cars? I would say they have surpassed many American and Japanese cars already.

However dynamically I would say they are not quite up the best there is just yet.

Is the best Korean 4wd or RWD sports car or FWD family car or FWD hatchback clearly the best in the world?

No. But they are very close.

Eg. The Hyundai i30 as good as VW Golf or a Ford Focus? No.

But it's close enough.

China needs to be where the Hyundai i30 is.

If they can design from scratch a car as good as the i30 and get Westerners to buy it, they have made it.

 

[green car driver]

It is exactly this "quantity over quality" mentality that won't take them anywhere. This is an extremely short-sighted point of view. A long time ago, Germany got over this, so did Japan, and now South Korea.

We shall not oppose quantity with quality. I've dreamed for years of a 1970 Dodge Challenger R/T 426 Hemi, and I wasn't the only one. But when I finally had the chance to be offered a ride in one, I discovered that its build quality was terrible. Lamborghini cars also, have famously been large pieces of junk. Audi bought the company, and the germans taught them how to build cars properly, but the cars that made Lamborghini famous, were of lousy build everywhere you could look at.

It's about boring cars versus exciting cars. That's the same thing for industry, and jobs too. You have to make boring stuff for years, before you're able to do exciting things.

The Toyota Corolla is one the most boring cars of all, but this is the car that Toyota. After a few years, they launched the Celica, then the Supra. It just takes time.

 

[green car driver]

China needs to be where the Hyundai i30 is.

If they can design from scratch a car as good as the i30 and get Westerners to buy it, they have made it.

It took Hyundai many years to design a car as good as the i30...

 

[SINOTRUK]

I think the biggest problem is the R&D ability. Actually our local auto manufactures learn a lot from the JV. However, it's a long way. In heavy duty truck field, a US/UK truck can be used for many years, maybe 20 years, while chinese trucks .......

 

[raton]

Why doesn't China have respectable brands that can compete in developed markets such as the US and Europe?

I think biggest obstacle to achieve that is the requirement that foreign automakers have a Chinese partner (the joint-ventures). Yes, I am saying this with a lot of hindsight, but while the idea of "Hey, let's force them to have a JV so we don't have to start from scratch" might have looked good in the beginning, it is clearly not going anywhere.

This is only slowing down the development of China's indigenous auto industry, because foreign automakers in forced JV's will not give up their latest technology. Instead, the Chinese market is fed with outdated platforms and tech. Automakers that have JV's have no real push to develop anything, because they already have a "partner."

The ones that don't will make cheaper cars for the other segment of the market, in a "race to the bottom." If China wants to have a respectable world-class automotive industry, they need to abolish the forced JV's as soon as possible. Indigenous automakers should still be protected, but when they are making cars to compete with rivals rather than "partners," there will be a push for development.

Would you agree?

One has to realize the Chinese auto marked is fairly new, 20 years or so and despite all shortcomings has dome remarkable well outselling the americans. Granted we have some not so hot cars , some copies and some real ugly things driving on Chinese roads. I think while talking about Chinese auto industries one must look past the success and strong sales and focus on after sales service, technical disclosure and spare parts quasi nonexistent on the Chine market. What are you thought about this ?

raton